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Energy Transfer Partners to Complete Retail Dropdown in 24 Months

Stripes, Sac-N-Pac and Sunoco Inc. assets moving.

May 7, 2015, 04:30 pm

DALLAS — Energy Transfer Partners LP (ETP) will drop down its entire retail division to Sunoco LP within 24 months, Jamie Welch, ETP's group financial officer and head of business development, confirmed during the company's 2015 fiscal first-quarter earnings call Thursday. Hence, all retail asset dropdowns should be completed no later than mid-2017.

ETP currently has ownership of the former Susser Holdings Corp. assets, including 663 Stripes and Sac-N-Pac convenience stores. ETP also owns the general partner of Sunoco LP, as well as subordinated units in Sunoco LP. In addition, ETP owns all of Sunoco Inc., including the Sunoco wholesale and retail businesses.

In total, ETP has 6,683 retail gasoline outlets, 1,258 of which are company operated. These c-stores and gas stations performed extremely well in ETP's first quarter that ended March 31.

Welch highlighted Stripes stores as turning in a particularly strong performance, except in the Texas Permian Basin region. This is likely due to recent lower gas prices. Still, the ETP executive noted that this one area of weakness was more than made up for by Stripes' strength in the Houston area and along the Interstate-35 corridor in Texas.

Overall, ETP's retail division achieved gross margins of $438 million, compared to $255 million in 2014's first quarter. Leading the way to stronger results was merchandise sales, which more than tripled to $481 million. The only weakness regarding in-store merchandise sales was tobacco category sales in Virginia, where taxes are high, Welch revealed.

Motor fuel gallons sold throughout ETP's retail division were also strong, increasing year over year from 1.392 billion gallons sold to 1.88 billion gallons sold. However, on a company-operated per-site basis, ETP sold 156,456 gallons per site per month, vs. 178,448 per site per month a year ago.

Companywide, Dallas-based ETP reported adjusted EBITDA of $1.15 billion for its most recent quarter, a decrease of $57 million compared to its 2014 first quarter. Income from continuing operations was $308 million, a year-over-year decline of $159 million.